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Consolidating credit cards is nothing new to a lot of people. Despite everything that happened during the Great Recession, Americans seem to have recovered from everything that they went through. They are now more confident to use credit. You can just look at the current credit card statistics to know that this is true. Even if the Federal Reserve has raised the interest rate several times, people are not feeling shy about borrowing money.

While the use of credit can be beneficial, it can also be dangerous. It can compromise your financial future. This is why you need to make sure that it is always under control. If you can manage it, pay off your credit card balance in full at the end of your billing cycle. But if that is not possible, at least try to get rid of credit card debt within a year.

Getting out of high-interest rate debts as fast as you can is necessary to help you build a stronger and more secure financial future. Fortunately for you, there are many ways for you to do that and one of them is consolidating credit cards through a balance transfer.

The truth about consolidating credit cards through a balance transfer

A balance transfer card is a type of credit card that is usually offered with a 0% or very low interest rate. This is meant to attract consumers with credit card debt. The goal is to encourage them to transfer the balance to this new card. With the low-interest rate, consumers can expect to get a lot of savings.

Unfortunately, a lot of people do not even know that this consolidation option exists. They have no idea there is a thing called balance transfer cards and that it can be used to consolidate credit card debts. They are missing out on a lot because when used properly, this consolidation option will really cut down your interest payments by a significant amount.

Of course, to be able to use it properly, you need to understand 3 important facts about balance transfer.

There is a limit to what you can transfer

This will depend on the creditor that offers the balance transfer card. The range is usually between $10,000 and $15,000 and it is within a period of 30 days. Not only that, but you also have to consider your own credit limit. If the balance transfer card is only approved for $10,000, then you really cannot transfer more than that amount. Sometimes, creditors will insist that you only transfer up to a certain percentage of your credit limit – like 75% or something.

Make sure that you read the fine print before you choose a balance transfer card. That way, you can be aware of these limits.

The transfer of your balance is not immediate

When you find out that you are approved of a balance transfer card, you need to initiate the process of consolidating credit cards. You have to either go online or give the new creditor a call so they can help you with the process.

Once the transfer is in process, it usually takes between 7 and 10 days to complete. Again, this will depend on the creditor. There are times when it will take longer – especially when they encounter issues with your other creditors.

It is very important that you keep on paying your debts as usual – at least until the creditor informs you of the successful transfer. That way, you will not be charged with late penalty fees. That will just be another unnecessary addition to your debt and you definitely do not want that.

There will be fees

It seems counterproductive to pay for fees so you can save on your debt payments. But if you do your calculations correctly, you will realize that it will all be worth it. As long as you can save a lot of money on interest, you should be able to cover the balance transfer fees and still save a lot more. According to statistics, Americans paid around $113 billion in interest alone in 2018. This is probably caused by the way Americans increased their borrowing and the higher interest rates set by the Federal Reserve. So to escape the higher interest rates, consolidating credit cards through balance transfer seems like a great move to make.

However, make sure you pay attention to the fees. There is usually an option to waive the balance transfer fee but the 0% interest will only be for a few months. But if you accept to pay the fee, you can enjoy the low-interest rate for a longer time. Make sure you compute how much you will be saving to determine whether you will waive the fees or not.

4 steps to consolidate credit cards using a balance transfer

Now that you know more about consolidating credit cards through a balance transfer card, it is time for you to go through with the whole process. If you do not know how to do this properly, it can be a risky way to consolidate debt. But if you know the steps to follow, you should be able to use it to completely achieve debt freedom.

Here are the 4 steps that will help you in consolidating credit cards by using a balance transfer card.

Look at balance transfer options

Start by looking for different balance transfer cards that are currently being offered. These change over time so make sure you are looking at an updated list. There are websites that have programs that will help you compare rates and terms. This will make it easier for you to choose the best option that fits your financial situation.

Submit your application

Once you have made your choice, send in your application. Do not just fill out the form. You have to make sure that you will read the fine prints too. If there is anything that you do not understand, you have to discuss it with them. Never sign anything unless you are sure about the terms. Not only that, you have to make sure that you are getting the best rates and terms. That means understanding the qualifications and requirements. The higher the credit score, the higher the chances of getting the best terms. You can also feel free to negotiate – especially if you have a really high credit score.

Start the transfer process

As mentioned, this is not automatic. You need to get in touch with the new creditor to begin the process. It will take a couple of days to complete – as long as no issues will be encountered. Make sure you keep paying your dues until the creditor confirms that the transfer is completed.

Pay off the balance within the promo period

After the transfer is complete, start paying off the balance. You should aim to pay off all your balance within the promo period. That way, all your payments will go to the principal balance. If you have to make sacrifices, go ahead and do it so you can maximize your payments. The faster you can get out of debt, the more money you can save.

Now that you understand more about balance transfer cards, you can effectively use it in consolidating credit cards. If you follow the rules carefully, you will soon find yourself a few payments away from debt freedom.

Getting rid of credit card debt within a year seems like a very difficult task to complete. However, it is not impossible to do so. You just have to find the self-control, discipline, and determination to complete the debt relief program that you have started.

When it comes to debt, Americans have successfully accumulated a lot of it. Reports reveal that the total consumer debt already exceeded $4 trillion. Among those that are fast increasing is credit card debts. In fact, by the end of 2018, consumers added $41 billion to their current balance. This is quite a lot of debt to pay back. Add to that the high-interest rate of credit cards, this balance will quickly grow if you do not do something about it.

Fortunately for you, all it takes is 4 simple steps to get out of credit card debts. If you do it correctly, you might be able to pay everything that you owe within a year after you started.

4 steps to pay off credit card debts fast

If you want to improve your financial future, it is a must that you get out of debt as soon as possible. Debt, especially the high-interest types like credit card debts, can compromise your financial security. Instead of using your money to grow your net worth, you are forced to use it to pay off debt. You could have used your limited income to save for a financial goal or invest it to allow compound interest to make it grow.

So what can you do to get rid of your credit situation? Here are the 4 simple steps that you need to follow.

Make a list of all your credit card debts

Start by making a list of everything that you owe. Most Americans own more than one credit card account. List all that is under your name. Make sure you write the credit card details like the balance, interest rate, due date, etc. This will help you get a general overview of everything that you owe. It will also allow you to determine how much you need to pay back.

Look at your budget plan

Once you have listed all your credit card debts, you need to analyze your current financial situation. How much are you earning each month? And how much of that is being spent on your basic necessities and other monthly expenses? You want to update your budget plan so you can figure out the amount that you can allocate towards your debt payments. If you want to get out of debt within a year, you should pay the highest amount that you can afford. The more you can pay, the shorter the repayment period will be.

Choose a debt consolidation program

Once you have figured out how much you can afford to pay, it is time to determine the debt relief program that you will use. At this point, your best option to deal with your credit card debts is consolidation.

Choosing debt consolidation means you will have a simple repayment plan. Not only that, you can probably save on your debt payments – especially if you can negotiate a lower interest rate and have a shorter repayment period. As you pay the consolidated debt, you will also be strengthening your credit score.

The question is, what type of consolidation strategy will you choose? There are so many options to choose from. You have debt management, balance transfer, and debt consolidation loans. Make sure you to consider your financial situation before you make a choice. That way, you can smartly choose the right debt solution that you can stick to.

When you choose the right debt consolidation strategy to pay off your credit card debt, it should be easier to complete it. After all, it should be perfectly suited to your current financial situation. That means the payments should be affordable. Not only that, but it should also be aligned with any financial goals that you have. When you know the credit card debt consolidation will bring you one step closer to your goals, it will motivate you to do better.

Tips to pay off credit card debt fast

If you really want to pay off all your credit card debt fast, you need to follow a couple of tips to be successful. These can be applied regardless of the debt consolidation strategy that you choose to do.

Revise your budget plan

Start by revising your budget plan. If you landed in debt, there is a high chance that your budget plan was flawed, to begin with. It is probably time to check and make sure that it is updated. And while you are at it, you might as well create a bare basic budget plan. This will help you maximize your monthly payments. It gives you the chance to analyze your spending and see where you can save on. Anything that you stop spending on can be used to increase your debt payments.

Stop adding to your debt

The more that you add to your debts, the longer it will take for you to get out of debt. If you want to achieve debt freedom within a year, you have to stop adding to your credit card debt. Stick to using cash for now. If you cannot afford to pay for something in cash, do not buy it. Do not worry because this will only be temporary. After you have paid at least a significant portion of your debts, then you can think about using your credit cards once more. But when that time comes, you should have developed smart spending habits. This practice should help you be more cautious about spending your money.

Increase your monthly payments

Any chance that you get, you need to make an effort to increase your monthly debt payments. If you get a bonus, use it to pay more of your credit card debt. In case someone gives you money, use it to pay your debts. Go through your stuff and declutter your life. Anything that you do not need should be sold. The profits can go to your debt payments too. Every little effort will soon have a significant impact on your balance.

Using a credit card is not so bad. But if you cannot pay off your balance in full when the billing statement comes, that can lead to a lot of problems. And if you are content to just paying off the minimum payment requirement, you will soon find yourself in a lot of trouble. If you think that you can no longer pay more than the minimum, it might be better if you just opt to consolidate credit card debts.

Effects of paying only the minimum amount

There are a lot of negative effects if you stick to the minimum payment requirement of your credit card balance. Here are some of the most destructive ones.

It will increase the overall debt

First of all, and probably the most important, is that it will increase the overall debt that you owe. Your credit card debt increases because the finance charge is added to the balance that is carried over to the next billing cycle. The finance charge is based on the interest rate of your credit cards. The higher the interest on your credit account, the higher the amount that will be added to the balance after the finance charge. This is how you will end up with mountains of debt.

It keeps you in debt longer

Another negative effect of paying only the minimum requirement is it will keep you in debt longer. If you look at a minimum payment calculator, it will take you more than a decade or even decades to complete all your payments. For instance, if you have $3,000 worth of credit card debts with an interest of 17%, paying only the minimum amount would mean taking 126 months to completely pay it off. And this is with the assumption that you will not add any debt to your current balance. If you owe more and if it has a higher balance, you might be about to retire and still be paying off the same credit account.

It increases the chance of being delinquent

If you are in debt longer because you stick to the minimum payment, there is always a higher chance of being delinquent. Sometimes, you can only keep up the discipline of paying off your debts religiously. When you start acting on milestones like getting married, buying your own house, or having kids, your priorities will start to change. Soon, paying for the credit card debt will start to feel less of a priority. You might end up skipping on your payments. While reports reveal that the delinquency rate is not so bad compared to back in 2015, sticking to the minimum amount might change all that.

It might have a negative effect on your credit score

When you start becoming delinquent that can have an effect on your credit score. Not only that, if your balance stays high for a long time, it might affect your credit utilization rate. When that happens, you can really expect your credit score to go down. If you have plans of applying for a mortgage to pay for your own house, you might have to delay that until you have paid off your credit card balance. Better yet, you might want to consolidate credit card debts to start paying it off.

It keeps you feeling stressed

There is nothing like being in debt to make you feel really stressed. This is especially true if you have limited finances. It can get very stressful if you know that you have so little resources and so many payables. The high-interest of credit card debts will also make you feel anxious. After all, it can quickly make your balance grow. So if you want to live a more peaceful life, you might want to get rid of all your debts.

Why consolidating credit card debts is better

If you are stuck paying the minimum requirement of your credit card debts, you need to do something about it. You cannot just let it ruin your life and financial future slowly. Believe it or not, credit card debt has that power. So to be proactive about your finances, you need to consolidate credit card debts.

Here are the benefits of doing this.

You can get a lower interest rate

First of all, it gives you the chance to get a lower interest rate. If the problem started recently and you have only been paying the minimum a couple of times, there is a high chance that you still have a good credit score. This will help you get a lower interest rate on a debt consolidation loan. Generally, a loan has a lower interest rate than credit cards. If you can get approval for a loan that can cover all your high-interest credit card debts, you might be able to save a lot of money on the overall amount that you will pay.

Or if you use a 0% interest balance transfer card, you can enjoy paying no interest on the debt for a certain period. This will really be beneficial if you can pay off the whole debt before the promo period ends.

You can lower your monthly payments

Another benefit when you consolidate credit card debts is its ability to give you a lower monthly payment. This will allow you to consolidate debt even if you feel like you are broke. You can simply choose a loan with a smaller monthly due date. You can discuss this with the lender before the loan is approved. This way, it is clear how much you can comfortably pay off each month.

You have a more definite repayment plan

Finally, when you consolidate credit card debts, you can expect a more definite repayment plan. It will help you plan your finances better. With credit card debts, it is hard to determine when you will completely pay off your debts. The finance charge will continually change your balance. But with a loan, you know when the debt will be completely paid off. That will help make your financial future easier to plan.